Further Reading

Cogent CEO Dave Schaeffer has claimed that his company is simply the only one willing to put up a public fight. But even though Cogent makes the most noise, it's not the only Internet bandwidth provider battling consumer Internet service providers like Comcast, Verizon, and AT&T. Level 3, another company that has fought consumer ISPs in previous years, has mostly remained quiet lately.

But today, Level 3 decided to voice its displeasure in a blog post by general counsel for regulatory policy Michael Mooney. Additionally, Level 3 recently asked the Federal Communications Commission to regulate the network interconnections known as peering in a possible revision of network neutrality rules.

Like Cogent, Level 3 is one of the Internet bandwidth providers that Netflix and other companies pay to distribute their traffic across the Internet. Both have objected to demands that they pay for the right to peer, or exchange traffic with, last-mile ISPs that serve home broadband users.

Level 3 itself caved in and agreed to pay Comcast after a dispute over Netflix traffic in 2010, and it appears to be troubled that Netflix just recently agreed to pay Comcast as well. Mooney today wrote:

Residential broadband ISPs promise their subscribers access to all of the content on the Internet, not just some of it. They also know full well that, in the Internet as it exists today, much more data will be downloaded by consumers (think of watching an HD Netflix movie) than uploaded (think of clicking your mouse to ask Netflix to send you that movie). As such, all ISPs offer download speeds that are faster than upload speeds.

To honor the promises they make consumers, these ISPs must then connect their networks to the other networks that can supply any Internet content the ISPs cannot provide themselves (which is most of it). It also means that as overall Internet content gets bigger (think of HD movies versus e-mails), all providers must “augment” their networks—making them bigger to accommodate the exponential growth due to the Internet’s success.

Some ISPs, however, have refused to augment their networks UNLESS the content providers they connect to agree to pay them to do so. Viewed in the light most favorable to these ISPs, they want content suppliers to pay not only for their own increased costs of supplying more robust Internet content, but also for any increased network costs of the ISPs too. This is not only unreasonable on its face, but it is entirely inconsistent with published reports indicating that returns on invested capital for ISPs are excellent, and are expected to improve even further, driving considerable additional growth in economic profits. More cynically, these ISPs simply view these arbitrary tolls as new sources of revenue for their last mile bottleneck monopolies or as a way to unfairly discriminate against content that competes with the content the ISPs themselves supply.

So what if content providers refuse to pay? Some ISPs agree to augment capacity on reasonable terms. But other ISPs try to strong arm the content providers into paying by playing a game of “chicken” with the Internet. These ISPs break the Internet by refusing to increase the size of their networks unless their tolls are paid. These ISPs are placing a bet that because content providers have no other way to get their content to the ISPs subscribers, that they will cave in and start paying them.

Mooney said the latest problems aren't new, referencing a previous dispute between Level 3 and AT&T. "These last mile ISPs know full well the consequences of what they are doing. We wrote AT&T about it in February 2011," he wrote. "We have written to other ISPs about it since then. In each of these cases, we offered to sit with the ISP to hammer out a fair, equitable, scalable, and resilient network architecture, but to no avail. We have also advised the FCC of the issue on more than one occasion, beginning in 2013 and as recently as three weeks ago."

Level 3 has proposed that network interconnection agreements between it and consumer ISPs measure traffic via "bit miles," the distance traffic is carried and the number of bits carried, regardless of which direction the traffic flows.

Mooney warned that disputes between ISPs and companies like Level 3 could result in VoIP phone calls being dropped or not connected at all, poor quality for video services like Netflix and Major League Baseball's streaming platform, and general slowdowns and error messages in Web browsing.

Mooney ended his post by expressing general support for network neutrality rules. The FCC's net neutrality rules were recently vacated by a court ruling, but the agency may reinstate them in some form. If the FCC doesn't do so, ISPs will be free to block or degrade services and charge content providers for preferential access on their networks.

Even without such rules, ISPs can charge companies like Netflix for direct connections to their networks as long as they treat all content equally in the "last mile" from consumer ISP networks to broadband subscribers. That's because the FCC's net neutrality rules did not cover paid peering connections like the one Comcast has with Netflix. Like Comcast, Verizon and AT&T each argue that the huge amount of traffic Netflix sends to consumers—above 30 percent of all Internet traffic at peak times—justifies payment demands. Verizon and AT&T are both negotiating with Netflix.

Level 3 has argued that the FCC's next set of network neutrality rules should be expanded to cover peering agreements. Level 3's letter to the FCC on Feb. 21 said that "the Commission’s Open Internet rules, by failing to address peering, had failed to address these serious problems. Increased consumer demand for online video services, the fact that online video services are such a large fraction of online traffic, and the fact that online video services are particularly vulnerable to the effects of congestion mean that there is functionally little difference between the type of 'discrimination' addressed by the Commission’s former rules and the type of behavior actually practiced by some ISPs but arguably permitted under those rules."

ISP abuses should be prevented whether they "come in the form of explicit discrimination or the kind of anticompetitive, monopoly rent-seeking conduct Level 3 has observed," the company said.

Promoted Comments

I assume we will soon hear how Level 3 is a terrible company and no one likes working with them so it's their fault.

The key here is in the monopoly/duopoly control of the end user connection. Comcast, VZW, TWC, et. al. know that the consumer doesn't really have choices, so they can wield access to the end user as a club against content provider systems.

At this point, as much as I hate government interference, I feel like the government stepping in to force common carriage over all internet access systems is the only real solution. That or the build out of government held fiber networks with common access to provide competition.

This is exactly what we need. We need more content companies fighting this comcrap crap! I believe it's only a matter of time until the big guys fight it out in court. Eventually we will get what we already paid for; free and open internet at GB speeds. Competition will bring down prices and bring up quality once the last mile is opened up one way or another.

Edit: strangley enough when I hit submit, the website went down on my comcast link...Strange indeed....

The last mile ISP's are rent-seeking monopolies that would rather litigate than innovate. The FCC should have given them common carrier status years ago and regulated them as the monopolies they have always been.

I assume we will soon hear how Level 3 is a terrible company and no one likes working with them so it's their fault.

The key here is in the monopoly/duopoly control of the end user connection. Comcast, VZW, TWC, et. al. know that the consumer doesn't really have choices, so they can wield access to the end user as a club against content provider systems.

At this point, as much as I hate government interference, I feel like the government stepping in to force common carriage over all internet access systems is the only real solution. That or the build out of government held fiber networks with common access to provide competition.

A question might be "how much of the internet do these companies provide?" Is it just a handful or is it big stuff? If it is enough, they could just refuse to provide content unless the ISPs PAY THEM or stop being assholes - I mean, isn't that how ISPs work? Charging for the provided content? Of course if all the big names have already caved to demands from ISPs, then these provided don't have the ability to stop playing ball and let the fall out hit the ISPs straight in the guy.

It's pretty upsetting that Netflix caved, they should have put whatever money they paid comcast into lobbying/marketing/public awareness.

I hope everyone else refuses to pay.

It's a nice sentiment, but Netflix needs to reach the ISP's customers more than the ISPs need Netflix in order to remain in business.

(In other words, if all ISPs refused to route to Netflix, would you drop your Internet service? ....Didn't think so.)

Of course not, largely because you don't have the option. But if a few dozen major sites on the internet went dark with a nice "Your ISP refuses to blah blah blah" message, how fast do you think this would resolve itself?

It's pretty upsetting that Netflix caved, they should have put whatever money they paid comcast into lobbying/marketing/public awareness.

I hope everyone else refuses to pay.

It's a nice sentiment, but Netflix needs to reach the ISP's customers more than the ISPs need Netflix in order to remain in business.

(In other words, if all ISPs refused to route to Netflix, would you drop your Internet service? ....Didn't think so.)

Actually, I might. Video streaming at home and downloading a Steam game occasionally are my heavy-bandwidth uses. If the video is taken away, I can do almost everything else over my mobile connection...

This is exactly what we need. We need more content companies fighting this comcrap crap! I believe it's only a matter of time until the big guys fight it out in court. Eventually we will get what we already paid for; free and open internet at GB speeds. Competition will bring down prices and bring up quality once the last mile is opened up one way or another.

Edit: strangley enough when I hit submit, the website went down on my comcast link...Strange indeed....

There is a better chance that Elvis is still alive then us "getting what we paid for" these companies spend millions dollars to prevent local government from providing internet service to its community.

It's a nice sentiment, but Netflix needs to reach the ISP's customers more than the ISPs need Netflix in order to remain in business.

(In other words, if all ISPs refused to route to Netflix, would you drop your Internet service? ....Didn't think so.)

What Netflix ought to do is provide a nice helpful notice to Comcast subscribers: "We're sorry for the poor performance in watching our videos, but your ISP refuses to use the billions of dollars a year they make from Internet subscribers to upgrade their equipment, while deliberately over-utilizing that equipment to serve more people than they can handle. As a result, your video watching experience may suffer. If you are unhappy with these circumstances, please consider switching ISPs. If you cannot switch ISPs due to no local competition, please contact the FCC and let them know you would like Comcast to be regulated as the monopoly they are."

It's pretty upsetting that Netflix caved, they should have put whatever money they paid comcast into lobbying/marketing/public awareness.

I hope everyone else refuses to pay.

It's a nice sentiment, but Netflix needs to reach the ISP's customers more than the ISPs need Netflix in order to remain in business.

(In other words, if all ISPs refused to route to Netflix, would you drop your Internet service? ....Didn't think so.)

This is an interesting question. Internet connection itself has no intrinsic value. If there is no content I desire I would not need an internet subscription. In my opinion the ISP depends on content demand in order to be able to sell their product. (access)

It's pretty upsetting that Netflix caved, they should have put whatever money they paid comcast into lobbying/marketing/public awareness.

I hope everyone else refuses to pay.

It's a nice sentiment, but Netflix needs to reach the ISP's customers more than the ISPs need Netflix in order to remain in business.

(In other words, if all ISPs refused to route to Netflix, would you drop your Internet service? ....Didn't think so.)

Did I misread it? It seemed like Comcast is providing a pipe to the regular internet and all traffic coming in was getting treated equally. Level 3 and Netflix wanted a bigger pipe and/or faster connection so that Neflix end users would have full HD and less lag. Comcast wasn't blocking Netflix, they just weren't giving them a priority pass or a secondary route to get data in faster. Comcast was treating them like any other internet service and Netflix/Level 3 wanted peering/colocation so that the service worked better. Comcast said OK, you want a better connection, you pay for it, just like every other customer.

Incorrect. The customer wants the bigger pipe. The customer wants to view HD movies and use Skype. And the customer is paying Comcast for this. And yet Comcast is trying to force someone else to pay for the content that the customer already paid for.

The customer pays Comcast for the bandwidth. The customer pays Netflix for the content. Comcast is trying to blackmail Netflix into giving it some of the customers money paid towards content when they are already being paid by the customer for the bandwidth.

It's pretty upsetting that Netflix caved, they should have put whatever money they paid comcast into lobbying/marketing/public awareness.

I hope everyone else refuses to pay.

It's a nice sentiment, but Netflix needs to reach the ISP's customers more than the ISPs need Netflix in order to remain in business.

(In other words, if all ISPs refused to route to Netflix, would you drop your Internet service? ....Didn't think so.)

The problem is that no one is going to run to Netflix's aid and say "hey I'll keep up my subscription even though my ISP has throttled you down to the point of being useless." All it takes is a few slow videos and people will blame Netflix and cancel their accounts. They'll say that renting through the cable companies works better (well of course). They won't see that it's the cable company's fault, and even if they do they aren't that attached to Netflix. Netflix has no choice.

It's pretty upsetting that Netflix caved, they should have put whatever money they paid comcast into lobbying/marketing/public awareness.

I hope everyone else refuses to pay.

It's a nice sentiment, but Netflix needs to reach the ISP's customers more than the ISPs need Netflix in order to remain in business.

(In other words, if all ISPs refused to route to Netflix, would you drop your Internet service? ....Didn't think so.)

Did I misread it? It seemed like Comcast is providing a pipe to the regular internet and all traffic coming in was getting treated equally. Level 3 and Netflix wanted a bigger pipe and/or faster connection so that Neflix end users would have full HD and less lag. Comcast wasn't blocking Netflix, they just weren't giving them a priority pass or a secondary route to get data in faster. Comcast was treating them like any other internet service and Netflix/Level 3 wanted peering/colocation so that the service worked better. Comcast said OK, you want a better connection, you pay for it, just like every other customer.

You almost describe it but you left a few details out.

Comcast OVER subscribes that pipe, so now they are trying to stuff a 100-ton elephant in a 10lb cat hole.

It is in Comcast's best interest to upgrade that existing pipe, they refuse to do so, because they can make more money selling smaller dedecated pipes to companies like Netflix while cramming everything else in that single over utilizied pipe.

Call me pessimistic but nothing will change.FCC is run by a former cable lobbyist.There is no way to say this is not a conflict of interest yet no one seems to care.

Cable companies are monopolies where only the fear of Google plus can get them to upgrade their services in select areas at reasonable rates. The rest of the US just has to deal with slow, over priced service.

Cable companies are spending millions getting laws quietly put on the books to stop municipal ISPs, or when they try to start building hold them up in court while the cable companies can get a leap on their build outs in the new areas.

It's pretty upsetting that Netflix caved, they should have put whatever money they paid comcast into lobbying/marketing/public awareness.

I hope everyone else refuses to pay.

It's a nice sentiment, but Netflix needs to reach the ISP's customers more than the ISPs need Netflix in order to remain in business.

(In other words, if all ISPs refused to route to Netflix, would you drop your Internet service? ....Didn't think so.)

Of course not, largely because you don't have the option. But if a few dozen major sites on the internet went dark with a nice "Your ISP refuses to blah blah blah" message, how fast do you think this would resolve itself?

It's pretty upsetting that Netflix caved, they should have put whatever money they paid comcast into lobbying/marketing/public awareness.

I hope everyone else refuses to pay.

It's a nice sentiment, but Netflix needs to reach the ISP's customers more than the ISPs need Netflix in order to remain in business.

(In other words, if all ISPs refused to route to Netflix, would you drop your Internet service? ....Didn't think so.)

Did I misread it? It seemed like Comcast is providing a pipe to the regular internet and all traffic coming in was getting treated equally. Level 3 and Netflix wanted a bigger pipe and/or faster connection so that Neflix end users would have full HD and less lag. Comcast wasn't blocking Netflix, they just weren't giving them a priority pass or a secondary route to get data in faster. Comcast was treating them like any other internet service and Netflix/Level 3 wanted peering/colocation so that the service worked better. Comcast said OK, you want a better connection, you pay for it, just like every other customer.

Not an issue of "pipe size" demand from netflix. The problem is that your ISP sells you a 12mbit( or whatever) connection and actually does not deliver this service to you.

It's pretty upsetting that Netflix caved, they should have put whatever money they paid comcast into lobbying/marketing/public awareness.

I hope everyone else refuses to pay.

It's a nice sentiment, but Netflix needs to reach the ISP's customers more than the ISPs need Netflix in order to remain in business.

(In other words, if all ISPs refused to route to Netflix, would you drop your Internet service? ....Didn't think so.)

Did I misread it? It seemed like Comcast is providing a pipe to the regular internet and all traffic coming in was getting treated equally. Level 3 and Netflix wanted a bigger pipe and/or faster connection so that Neflix end users would have full HD and less lag. Comcast wasn't blocking Netflix, they just weren't giving them a priority pass or a secondary route to get data in faster.

Nobody is saying for sure, but it is more like Netflix/L3/Cogent had a 10 unit/second connection to Comcast, but the ISP customers were requesting 14 units/second of data at peak usage. And that's where Comcast was demanding payment. Even the the demand is generated by their paying customers.

It's pretty upsetting that Netflix caved, they should have put whatever money they paid comcast into lobbying/marketing/public awareness.

I hope everyone else refuses to pay.

It's a nice sentiment, but Netflix needs to reach the ISP's customers more than the ISPs need Netflix in order to remain in business.

(In other words, if all ISPs refused to route to Netflix, would you drop your Internet service? ....Didn't think so.)

This is an interesting question. Internet connection itself has no intrinsic value. If there is no content I desire I would not need an internet subscription. In my opinion the ISP depends on content demand in order to be able to sell their product. (access)

That's nice in theory, but I really don't believe it would play out like that.

Sure, if *nothing* was left on the internet, you would have no reason to pay for it, but if instead it was only the most popular video streaming sites that were shut off from view and there was no ISP competition in the market, I would bet that there would be furious customers but approximately 0 account cancellations.

Internet access is basically a requirement in the US at this point and ISPs have in most places a de jure monopoly on that access, so the dream of video sites going dark in protest will not be sufficient to really change things (and meanwhile those video sites would take a huge hit in revenue). The government is really going to have to step in, if only to fix the mess it made of things in the first place.

I think the easiest answer is to take back the last mile from bad ISPs. Individuals or cities should own their own "last mile" instead of the ISP. If an individual owns or leases the last mile, just about anyone can start an ISP up as a business and tie in at the CO. And infrastructure to run an ISP is very inexpensive these days.

Relying on the FCC hasn't exactly been that reliable in the past. So maybe someone needs to take action outside of the regulators to build new and more open infrastructure to displace bad incumbents.

It's pretty upsetting that Netflix caved, they should have put whatever money they paid comcast into lobbying/marketing/public awareness.

I hope everyone else refuses to pay.

It's a nice sentiment, but Netflix needs to reach the ISP's customers more than the ISPs need Netflix in order to remain in business.

(In other words, if all ISPs refused to route to Netflix, would you drop your Internet service? ....Didn't think so.)

Did I misread it? It seemed like Comcast is providing a pipe to the regular internet and all traffic coming in was getting treated equally. Level 3 and Netflix wanted a bigger pipe and/or faster connection so that Neflix end users would have full HD and less lag. Comcast wasn't blocking Netflix, they just weren't giving them a priority pass or a secondary route to get data in faster. Comcast was treating them like any other internet service and Netflix/Level 3 wanted peering/colocation so that the service worked better. Comcast said OK, you want a better connection, you pay for it, just like every other customer.

Not an issue of "pipe size" demand from netflix. The problem is that your ISP sells you a 12mbit( or whatever) connection and actually does not deliver this service to you.

And then imposes a cap so that they CAN deliver this to you with reasonable overage charges and this nifty little monthly charge that will magically make Netflix and the like work.

It's pretty upsetting that Netflix caved, they should have put whatever money they paid comcast into lobbying/marketing/public awareness.

I hope everyone else refuses to pay.

It's a nice sentiment, but Netflix needs to reach the ISP's customers more than the ISPs need Netflix in order to remain in business.

(In other words, if all ISPs refused to route to Netflix, would you drop your Internet service? ....Didn't think so.)

Did I misread it? It seemed like Comcast is providing a pipe to the regular internet and all traffic coming in was getting treated equally. Level 3 and Netflix wanted a bigger pipe and/or faster connection so that Neflix end users would have full HD and less lag. Comcast wasn't blocking Netflix, they just weren't giving them a priority pass or a secondary route to get data in faster. Comcast was treating them like any other internet service and Netflix/Level 3 wanted peering/colocation so that the service worked better. Comcast said OK, you want a better connection, you pay for it, just like every other customer.

You have a few typos in there, Clippy can help clean them up!

Did I misread it? It seemed like Comcast is providing a pipe to the regular internet and all traffic coming in was getting treated equally poorly. Comcast customers wanted a bigger pipe and to get use of the fast connection they pay for so that Comcast customers have full HD and less lag. Comcast wasn't blocking Netflix, they just weren't providing sufficient bandwidth links to Netflix hosts. Comcast was treating them like a competing video streaming service and Netflix/Level 3 wanted appropriately scaled peering/colocation so that the service worked better. Comcast said OK, you want a better connection, you pay for it, even though our customers already have.

The thing that people seem to forget here is that Netflix paying the ISPs isn't purely bad for Netflix.

Netflix has enough volume that they can afford it. Smaller streaming-video competitors likely cannot, which means that Netflix gets this premium speed toll lane that makes their content faster than everyone else's. Obviously they'd rather take the free option, but in the presence of congestion, the toll lane gives them a competitive advantage.

It's a nice sentiment, but Netflix needs to reach the ISP's customers more than the ISPs need Netflix in order to remain in business.

(In other words, if all ISPs refused to route to Netflix, would you drop your Internet service? ....Didn't think so.)

If my ISP refused to route to Netflix, I would drop them in a heartbeat, but I have a few viable options, while most people do not.[/quote]Ah, but I was trying to illustrate who had the dominate negotiating position. In my scenario <b>ALL</b> service providers refused to route to Netflix, so while you may have many choices, none of them will get you to Netflix. Do you still think you would take yourself offline in protest?

I've pretty much developed the outlook that if my ISP supports something, says that doing something would promote competition or provide better value for consumers, it will probably not be a good thing for me.

I don't take this issue with all businesses, just big content businesses that operate in a de-regulated industry that is the textbook definition of a natural monopoly.

I work on an ISP (in south america) and we are constantly looking for new peerings with Google/Netflix/CDN´s, Akamai Cache, Google Cache, etc.

All this utilizing our equipment, our fiber, our network just to give the Consumer a better experience.

Of course, we are not nearly 2% of comcast size but if our revenue makes it possible for us, Comcast has to be sitting on a big freaking pile of money. They just want to screw CDN´s while screwing their customers.

It's pretty upsetting that Netflix caved, they should have put whatever money they paid comcast into lobbying/marketing/public awareness.

I hope everyone else refuses to pay.

It's a nice sentiment, but Netflix needs to reach the ISP's customers more than the ISPs need Netflix in order to remain in business.

(In other words, if all ISPs refused to route to Netflix, would you drop your Internet service? ....Didn't think so.)

Did I misread it? It seemed like Comcast is providing a pipe to the regular internet and all traffic coming in was getting treated equally. Level 3 and Netflix wanted a bigger pipe and/or faster connection so that Neflix end users would have full HD and less lag. Comcast wasn't blocking Netflix, they just weren't giving them a priority pass or a secondary route to get data in faster. Comcast was treating them like any other internet service and Netflix/Level 3 wanted peering/colocation so that the service worked better. Comcast said OK, you want a better connection, you pay for it, just like every other customer.

Incorrect. The customer wants the bigger pipe. The customer wants to view HD movies and use Skype. And the customer is paying Comcast for this. And yet Comcast is trying to force someone else to pay for the content that the customer already paid for.

The customer pays Comcast for the bandwidth. The customer pays Netflix for the content. Comcast is trying to blackmail Netflix into giving it some of the customers money paid towards content when they are already being paid by the customer for the bandwidth.

Agreed, but Isn't the logical conclusion that Comcast is engaged in fraud? If Comcast is selling the same thing to two different people how is that not different than a kid getting his allowance from his dad and then asking his mom for that same allowance as if his dad didn't already give it to him.